There's a lot of talk that the economy could be heading toward a recession in 2023. The Federal Reserve has continued raising interest rates to cool off inflation, which has already started to slow several sectors of the economy. A full-blown downturn could cause more economically sensitive companies to reduce their dividends. 

However, many dividend stocks should be able to withstand a recession. Three that some contributors believe are fully recession proof are Agree Realty (ADC 0.39%), Camden Property Trust (CPT 1.03%), and Alexandria Real Estate Equities (ARE 0.43%). Here's why they're ultra-safe dividend stocks to own even as a potential recession looms overhead. 

Agree Realty is a long-proven dividend stock that should resist a recession

Marc Rapport (Agree Realty): Will there be a recession in 2023? Some would argue it's already here; others say there's one on the way. Either way, conservative investors -- including retirees like me -- do have some choices in the stock market that should fare just fine.

One of my favorites is Agree Realty. This suburban Detroit-based real estate investment trust (REIT) owns more than 1,700 stand-alone retail properties and ground leases that it leases to reliable tenants in all 48 continental states. That includes such recession-resistant retailers as Home Depot, Dollar General, Walmart, and Kroger, just to name a few.

Agree Realty has been around for a while, weathering market turbulence along the way and, since going public in 1994, posting a total return of 620%, more than twice that of the benchmark Vanguard Real Estate ETF and nearly 60% more than the S&P 500.

This retail REIT also has been a reliable source of dividend income, growing payouts at a compound average annual rate of 5.8% over the past decade. Agree pays monthly, too, and at the moment is yielding about 4% at a share price of about $72.

As further proof of its stability, even in this bear market, Agree Realty's share price is down only about 1% year to date at this writing, compared with nearly 20% for the S&P 500, and its total return is in the black at about 2.75%.

No stock market investment is completely immune from risk, but Agree Realty stands out as an ultra-safe dividend stock that should be able to not only hold its own, but keep growing dividends and total returns next year and for years to come.

A low-risk landlord

Matt DiLallo (Camden Property Trust): Apartment demand tends to be relatively recession-resistant. People need a place to live, and economic downturns make consumers more reluctant to make big purchases like a house. Because of that, multifamily REITs tend to generate stable income during a recession, making them solid investments for those concerned about a downturn in the coming year.

Camden Property Trust stands out as the safest multifamily REIT. The company has A-rated credit backed by very low leverage ratios. Meanwhile, it has an exceptionally durable portfolio. Camden owns 171 communities across 15 markets, primarily in the Sun Belt, that boast some of the country's best employment and migration trends. These features put Camden's 3.4%-yielding dividend on an ultra-safe foundation. 

The company has further secured the foundation under its dividend by growing its funds from operations (FFO) at a faster pace than the payout over the last decade:

A chart showing Camden's FFO, AFFO, and dividend per share growth over the past decade.

Image source: Camden Property Trust Investor Relations Presentation.

As that chart shows, Camden is retaining increasingly more cash even as it steadily grows the dividend. That's giving it an even bigger cushion while enhancing its ability to finance its expansion.

The company is investing over $750 million (more than half of which it has already funded) to build several more communities in fast-growing markets, including recently starting development on a couple of single-family rental communities. It also continues making high-return investments to upgrade many older communities, further enhancing their appeal to renters. These investments and rent growth at its existing locations should support continued FFO and dividend growth in 2023 and beyond. Add that steady growth to the company's ultra-strong balance sheet, and it's a rock-solid dividend stock to hold during a recession.

In a recession, it pays to play defense

Brent Nyitray (Alexandria Real Estate Equities): Alexandria Real Estate Equities is a REIT that focuses on office space for the technology and life sciences industries. While the switch to working from home has made the office REIT space out of favor, not all office REITs are the same. The customer base for an office REIT like SL Green Realty is a lot different than that for Alexandria. 

Alexandria's biggest tenants include Bristol-Myers Squibb, Moderna, and Eli Lilly. Tech companies like Uber Technologies and governments and universities are also major tenants. As a general rule, healthcare is much more recession-resistant than cyclical or consumer discretionary companies. 

Life sciences companies require sophisticated laboratory spaces, and this requires an in-depth knowledge of the regulatory and safety requirements that pertain to this industry. Most office REITs don't have the experience and in-depth knowledge of the space, which means that Alexandria benefits from fewer competing property owners in this market segment. 

The life sciences business is also highly collaborative, and requires access to lab spaces. This makes the work-from-home model less suitable for a lot of these companies. Alexandria also has a high occupancy rate of 94.3%, which compares favorably to some of its competitors like Boston Properties, which had 88.9%, and S.L. Green at 90.9%. 

Alexandria Real Estate Equities is trading at 17.2 times its guidance for FFO per share. REITs tend to use FFO to represent earnings, as this excludes some of the noncash charges that get applied to net income under generally accepted accounting principles (GAAP). Alexandria is more expensive than some competitors, but it dominates its niche.